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CONFIDENTIAL
increased (after Japan, China is now Hong Kong's pri dipal' supplier), and the foreign currency so earned (now about one third of China's, foreign exchange earnings) became a major source for financing the rehabilitation of a Chinese economy recovering from the chaos of the Cultural Revolution. The climate of relations between China and Hong Kong,
therefore, was determined by a recognition of the need for maintaining the status quo.
-36. In conversation with Mr Malcolm MacDonald (President of the Royal Commonwealth Society and shortly afterwards President of the Great Britain China Centre) who visited China in October 1971, Zhou Enlai touched on the subject of
Hong Kong. Although he drew attention to the distinction between the leased and the ceded territory, he
recognised the interdependence of the two parts, suggesting that Hong Kong would not be a viable administrative or economic unit without the New
Territories. Zhou suggested that the year 1997 would be regarded as a significant date, but that China had no intention of secking to get back Hong Kong until the expiry of the New Territories lease. In this respect, commented Zhou, China's approach to the recovery of Taiwan was quite distinct from that towards Hong Kong. Although Zhou's comments cannot be taken as a Chinese acknowledgement of the legitimacy of Britain's lease of the New Territories, they do indicate a Chinese desire to build and to protect confidence in the maintenance of the status
quo.
37. This aim was also evident in a conversation Zhou
Foreign had on 1 November 1972 in Peking with the/Secretary
Alec
Douglas-Home. Zhou then said that China would not use force to take over Hong Kong, its status was a matter that should be settled through negotiation
and consultation at some future date, but "there was no need to discuss this now". The following year, in 1973, the Chinese Foreign Minister, Ji Pengfei Chi 'eng-fei)
NIDUVM SIAL NI NELIUM 38 OL ONIHLON